Prema Padamakar pawar, Ahmednagar V. DCIT, A'Nagar Cir., Ahmednagar

ITA 942/PUN/2011

• Counselvise Citation: 94224514 RSA 2011
• Duration Of Justice: 1 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 29-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 07-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUKESH VERMA
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI G.S.PANNU, ACCOUNTANT MEMBER. ITA.NO.942/PN/2011 (ASSTT. YEAR : 2007-08) PREMA PADMAKAR PAWAR, 143/3, ANUPAM ROW HOUSING, NAGAPUR, AHMEDNAGAR 414111. .. APPELLANT PAN: ACHPP7651B VS. DCIT, AHMEDNAGAR CIRCLE, AHMEDNAGAR. .. RESPONDENT ASSESSEE BY : SHRI S.N.PURANIK DEPARTMENT BY : SHRI MUKESH VERMA DATE OF HEARING : 02.05.2013 DATE OF PRONOUNCEMENT : 28.05.2013 ORDER PER SHAILENDRA KUMAR YADAV, JM : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS: 1. THE LEARNED C.I.T.(A) ERRED IN CONFIRMING THE ADDIT ION OF RS.9,21,845/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF ALLEGED INFLATED LABOUR CHARGES ARBITRARILY ESTIMAT ED AT 18%. APPELLANT PRAYS TO DELETE THE ADDITION/DISALLOWANCE . 2. C.I.T.(A) HAS ERRED IN STATING ASSESSING OFFICER C AN BE SEEN TO HAVE CORRECTLY APPLIED SEC 145 OF THE ACT, WHEN AS SESSING OFFICER HAS NOT. APPELLANT PRAYS TO CONFIRM THAT BOOKS OF ACCOUNTS A RE NOT REJECTED. 3. APPELLANT PRAYS FOR JUST AND EQUITABLE RELIEF. 2. THE ASSESSEE IS AN INDIVIDUAL WHO IS ENGAGED IN THE OF INDUSTRIAL SUPPLY AND LABOUR CONTRACT. SERVICES H AVE BEEN RENDERED DURING THE YEAR UNDER CONSIDERATION TO VAR IOUS MULTI- NATIONAL CORPORATIONS IN AND AROUND RANJANGAON, DIS T. PUNE. ALL 2 THE RECEIPTS OF THE ASSESSEE WERE CLAIMED TO BE THR OUGH CHEQUES AND THE CONTRACTEE COMPANIES HAD BEEN ISSUED TDS CE RTIFICATES FOR THE ABOVE SUPPLIES MADE BY THE ASSESSEE. THE ASSES SING OFFICER DURING THE ASSESSMENT PROCEEDINGS WHILE EXAMINING T HE BILLS AND VOUCHERS RELATING TO THE EXPENSES DEBITED NOTED THA T THE EXPENSE VOUCHERS ARE SELF DRAWN AND THE NECESSARY DETAILS V IZ., DATES ETC., ARE MISSING. IN VIEW OF THE SAME, THE ASSESSING OF FICER TREATED THE VOUCHERS AS SELF SERVING AND IMPOUNDED THE SAME U/S .131 ON 10.07.2009. IT WAS ALSO OBSERVED THAT THE AUDITORS IN THEIR AUDIT REPORT HAVE ALSO POINTED OUT IN THE NOTE THAT VOUCH ERS ARE SELF MADE. THE ASSESSING OFFICER AFTER NOTICING VARIOUS DEFECTS REGARDING THE MAINTENANCE OF THE VOUCHERS AND THEIR VERIFIABILITY ISSUED SHOW CAUSE NOTICE FOR SUBMISSION OF EXPLANAT ION ON BEHALF OF THE ASSESSEE. THE ASSESSEE COULD NOT SUBMITTED ANY RELEVANT REPLY IN RESPECT OF THE ISSUES RAISED AND WHEN THIS DEFEC T WAS BROUGHT TO THE NOTICE OF THE AUTHORISED REPRESENTATIVE ON BEHA LF OF THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS, HE ADMI TTED THAT HE HAS NO EXPLANATION TO OFFER IN RESPECT OF THOSE DEF ECTS. THIS ASPECT HAS BEEN NOTED BY THE ASSESSING OFFICER ON 28.07.20 09 AS DETAILED IN PARA 4 OF THE ASSESSMENT ORDER. IN VIEW OF THIS , THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT AND PROCEEDED TO ESTIMATE INCOME BY DISALLOWING PART OF THE EXPENSES CLAIMED THROUGH THE VOUCHERS SUFFERING FROM DEFECTS AS DISCUSSED ABOVE. DURING ASSESSMENT PROCEEDINGS THE ASSESSEE HAS AGREED THAT THE NATURE OF WORK DONE BY THE ASSESSEE IS SUCH THAT DETAILS ARE MAINTAINED IN A ROUGH MANNER IN NOTEBOOKS DURING THE COURSE OF EXE CUTION. IN VIEW OF ABOVE IT WAS ARGUED BEFORE THE ASSESSING OF FICER THAT LABOUR COMPONENT GOES UPTO 54% OF THE CONTRACT VALUE. THE ASSESSING OFFICER THEREFORE CONSIDERING THE VARIOUS ASPECTS O F MAINTENANCE OF BOOKS CONCLUDED THAT EXPENSES ARE EXCESSIVE AND THE SAME ARE NOT MAINTAINED IN A MANNER WHICH CAN BE VERIFIED OR CON SIDERED SUBSTANTIATED. THEREFORE, 18% OF THE TOTAL LABOUR C HARGES OF RS.51,21,365/- WERE TREATED AS EXCESSIVE, ACCORDING LY DISALLOWED. SAME WAS COMPUTED AT RS.9,21,845/-. THE STAND OF T HE ASSESSEE BEFORE THE ASSESSING OFFICER HAS BEEN THAT THE PROF IT SHOWN AT 9% OF 3 THE GROSS RECEIPTS SHOULD BE TREATED AS REASONABLE. SAME WAS NOT ACCEPTED BY THE ASSESSING OFFICER FOR THE REASONS D ISCUSSED THEREIN. 3. IN FIRST APPEAL, THE CIT(A) UPHELD THE ORDER OF THE ASSESSING OFFICER. HE OBSERVED THAT THE ASSESSING OFFICER FO UND THE MAINTENANCE OF VOUCHERS AS DEFECTIVE AND UNVERIFIAB LE. THIS POSITION WAS CONFRONTED TO ASSESSEE DURING THE COUR SE OF ASSESSMENT AND DUE OPPORTUNITY WAS GIVEN AT RELEVAN T POINT OF TIME. INSTEAD OF GIVING REASONABLE ANSWER TO THE Q UERIES RAISED BY THE ASSESSING OFFICER, THE ASSESSEE ADMITTED THAT H E HAS NO EXPLANATION TO OFFER AND THIS ASPECT WAS NOTED IN T HE ORDER SHEET DATED 28.07.2009. IN VIEW OF ABOVE, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAS CORRECTLY INVOKED THE PROVISI ONS OF SECTION 145 OF THE ACT MORE SO WHEN DEFECTED OBSERVED BY THE AS SESSING OFFICER WERE CONFRONTED TO THE ASSESSEE WHEREIN ASSESSEE OF FERED NO EXPLANATION FOR THE SAME AND SAME POSITION REMAINED BEFORE THE APPELLATE PROCEEDINGS. IN THIS BACKGROUND, THE OBJ ECTION OF THE LD. AUTHORISED REPRESENTATIVE BEFORE US IS THAT THE BOO KS OF ACCOUNT SHOULD NOT BE REJECTED BECAUSE THE SAME ARE AUDITED , CANNOT BE ACCEPTED. EVEN THE AUDITOR HIMSELF HAS REPORTED I N THE AUDIT REPORT THE DEFECTS WHICH HAVE BEEN FOUND BY THE ASS ESSING OFFICER TO BE CORRECT. ACCORDINGLY HE REJECTED THE BOOKS O F ACCOUNT. AUDITORS HAVE POINTED OUT IN AUDIT REPORT THAT VOUC HERS WERE SELF MADE. MOREOVER, THE ASSESSING OFFICER IMPOUNDED TH E VOUCHERS AND POINTED OUT DEFECTS IN THE FORM OF SHOW CAUSE N OTICE. IN RESPONSE TO THE SAME, ASSESSEE ADMITTED THE DEFECTS AND OFFERED NO EXPLANATION TO THE ASSESSING OFFICER AT RELEVANT PO INT OF TIME, WHICH HAS ALSO BEEN NOTED BY THE ASSESSING OFFICER IN THE ORDER SHEET. THEREFORE, IT IS NOT CORRECT TO ARGUE AT THIS STAGE THAT DEFECTS ARE NOT CORRECTLY POINTED OUT BY THE ASSESSING OFFICER AND OPPORTUNITY WAS NOT GIVEN TO THE ASSESSEE. IN VIEW OF ABOVE DISCUSS ION, THE ASSESSING OFFICER WAS JUSTIFIED IN REJECTING THE BOOKS OF ACC OUNT. 4. SO FAR AS ESTIMATION IS CONCERNED FOR INFLATED L ABOUR PAYMENT, THE ASSESSING OFFICER HAS REACHED TO THE FIGURE OF 18% AFTER 4 EXAMINING THE NATURE OF VOUCHERS IMPOUNDED BY HIM. THE STAND OF THE ASSESSEE IN THIS REGARD HAS BEEN THAT THE ASSES SING OFFICER WAS NOT CORRECT AND THE BOOKS OF ACCOUNT RESULTS ARE TO BE ACCEPTED AS THE SAME IS ABOVE THE PERCENTAGE TAKEN UNDER PRESUM PTION SECTIONS 44AD, 44AE AND 44AF ETC., AND ALSO BECAUSE SAME IS COMPARABLE TO 9% OF THE PROFIT SHOWN IN A.Y. 2006-07. THOUGH EACH ASSESSMENT IS INDEPENDENT BUT IT HAS PERSUASIVE VAL UE. SINCE ASSESSEE IS NOT COVERED UNDER THE PROVISIONS OF SEC TIONS 44AD, 44AE AND 44AF, SO THE REVENUE AUTHORITIES BELOW HAV E NOT APPRECIATED THIS ARGUMENT AS SUCH. THE ASSESSEE HA S NOT BEEN ABLE TO DISCHARGE THE BURDEN CAST UPON HIM WITH REGARD T O PROFIT PERCENTAGE. BUT AT THE SAME TIME THE ASSESSING OFF ICER HAS ALSO NOT GIVEN COGENT REASONING WITH REGARD TO ESTIMATION OF PROFIT AFTER REJECTION OF BOOKS OF ACCOUNT. TAKING ALL THE FACT S AND CIRCUMSTANCES INTO CONSIDERATION, ADDITION ON ACCOU NT OF ALLEGED INFLATED LABOUR CHARGES ARE RESTRICTED TO 12%. THE ASSESSING OFFICER IS DIRECTED TO COMPUTE THE ADDITION ACCORDINGLY. 5. AS A RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 28 TH DAY OF MAY, 2013. SD/- SD/- ( G.S.PANNU ) ( SHAILENDRA KUMAR YAD AV ) ACCOUNTANT MEMBER JUDICIAL MEMBER GSPS PUNE, DATED THE 28 TH MAY, 2013 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DCIT, AHMEDNAGAR CIRCLE, AHMEDNAGAR. 3. THE CIT(A)-I, PUNE. 4. THE CIT-I, PUNE. 5. THE DR A BENCH, PUNE. 6. GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE.